While applying for a home loan, the most prior factor that an individual takes into account is the interest rate. Are you aware of the fact that same interest rate allows you great tax deductions. Under Section 24, you can claim a worthy amount of interest repaid depending on the cost of home loan, once you have the ownership of the house.
If you are dreaming of owning a home but financial instability is not allowing you to do so, then buying can still be a perfect resolution. Now you must be thinking how you can buy a home while leaving in a rented accommodation. Answer is quite simple; you can stay in the rental house as before and begin with home buying process. To carry out this money-making task while sustaining legitimacy you need to step a ladder of ideas:
Use Buying and Renting as a Combo
When you credit a home loan, you can stay in that home for a decided time period and later rent it to another party. This way you become eligible for both House Rent Allowance (HRA) and home loan tax benefits together. HRA benefits are those which imply on an employee’s salary and are entitled only for tenants. While living in your own city, you can also buy property in a different city, say a hill station. This will let you earn good rent and you can still claim:
- HRA Benefits
- Tax Benefits on Principal Amount
- Tax Benefits on Interest Rate
To ensure all the three benefits, keep in mind that the payable rent should anyhow exceed 10% of your Basic plus Dearness allowance.
Joint Loans Benefits
In the hurry-flurry of home buying process, do not pass over the tax breaks you can claim with a bit witty mind tricks. If you are a spouse and both are employed, instead of preferring to an individual loan, you can opt for a joint home loan. Doing so, you can not only share the burden of loan but also share the tax benefits equally. It may also depend upon the mutual understanding between couples. So, discuss all factors with each other and once it sounds perfect, beneficial deal is in your hands. This can also be profitable when an individual’s income is not enough to lend loan, so to meet the eligibility criteria they can share the mortgage and obtain tax deductions.
Tax Breaks on Self- Occupied Property
If you are fed up of living in a rental apartment and want to move to your comfy dwelling as soon as possible availing all tax benefits at the same time. If that’s what you are worried about then clear all your doubts as you are still eligible for tax benefits while residing in the same home. But the only benefit, you can avail is on tax deductions as HRA is only when you are paying a rent. If your new house needs renovation, then you can stay in the house for one year and re-construct it the next year, best way to claim profit on interest.
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